In the dynamic investment landscape, the spotlight often falls on the hottest sectors, attracting a swarm of investors. Yet savvy traders understand the attractiveness of value stocks which offer tremendous upside potential. With potential policy changes from the Federal Reserve on the horizon, these solid value stocks may provide a safer harbor, especially if higher interest rates curb the allure of growth-focused businesses.
This article includes a selection of these value stocks. They are from renowned, large-cap businesses that balance any portfolio with their conservative and defensive qualities. These stable value stocks aren’t just about safety, they also present a hefty upside propelled by various growth catalysts. As such, they demonstrate why investors should not overlook the potential of top value stocks, even in a market seldom distracted by the next big thing. Let’s look at three of the best value stocks to wager on offering tremendous upside potential in the current volatile stock market.
Amazon (AMZN)
As we effectively navigate the rocky terrain of the post-Covid economy, tech giant Amazon (NASDAQ:AMZN) stands out with its diversified portfolio in eCommerce, cloud computing, online advertising and streaming services. Though it’s operating in a remarkably unconducive environment, there is plenty of optimism for a late 2023 rebound, buoyed by robust consumer spending and consistent demand for Amazon Web Services.
Moreover, the firm is setting sail on uncharted waters by proposing a $1.7 billion acquisition of iRobot, renowned for its AI-driven Roomba vacuum cleaners. This strategic move towards the robotics industry, pending regulatory approvals, suggests a promising growth trajectory that boosts Amazon’s appeal to investors.
Furthermore, Bank of America (NYSE:BAC) analysts project Amazon’s latest Prime Day to rake in $12 billion in sales, a solid 10% year-over-year bump. This windfall is poised to provide a welcome uplift to Amazon’s third-quarter earnings. Alongside this, the tech giant’s cost-cutting measures will strengthen its financial footing further. AMZN stock currently trades at just 2.5 times forward sales estimates, approximately 21.5% lower than the sector average.
CVS Health (CVS)
CVS Health (NYSE:CVS), is a luminary in America’s pharmaceutical and managed care sectors that has been weathering a storm of uncertainties lately. Despite surpassing first-quarter earnings and revenue predictions, the downward revision of its annual guidance sent shockwaves through the market, resulting in a considerable dip in share price.
Still reeling from the post-pandemic test kit and vaccine sales slump, CVS faces a projected revenue drop in 2023. Adding to their woes, rising retail theft rates have resulted in stringent security measures, which continue to deter customers. A hefty $5 billion opioid settlement also looms large on their financial horizon.
Yet, despite the adversity, CVS is setting its sights on innovative growth avenues, chiefly the value-based care realm. With governmental bodies pushing to incorporate value-based care into Medicare by 2030, this sector presents a massive long-term growth opportunity.
Moreover, the stock trades at just 0.3 times forward sales estimates, 94% lower than its sector median. On top of that, it yields a spectacular 3.2%, roughly 120% higher than the sector median.
American Tower (AMT)
American Tower (NYSE:AMT) is a renowned cell tower operator, operating over 226,000 towers globally, presenting a stable proposition in an uncertain market. Cell towers, the lifeblood of our increasingly connected world, promise immense market stability immune to broader real estate fluctuations. The burgeoning IoT market effectively augments the significance of cell tower functionality and dispersion, painting a bright picture for American Tower’s future.
Notably, the firm’s geographical diversity offers stability and potential growth. American Tower stands at the forefront of the digital revolution, from operating in mature markets such as the U.S. to maintaining a firm foothold in emerging territories such as Africa. With the digital connectivity wave hitting these markets, the company is in an enviable growth position.
Unlike sectors prone to volatility, the consistent profitability of cell tower operations has facilitated 20 consecutive dividend increases. This testament to resilience underscores American Tower’s ability to weather any economic storm.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
